Korea Exchange Considers Longer Hours While Mulling Acquisitions

South Korea’s bourse operator may extend trading hours for Asia’s fourth-biggest equity market and will consider overseas acquisitions after local trading volumes slumped to a six-year low.

Korea Exchange plans to extend trading hours after the official close and may lengthen its six-hour regular trading day within five years to boost liquidity in the $1.2 trillion market, according to its first development plan since Choi Kyung Soo took over as chairman in October. The bourse will consider acquiring foreign alternative trading systems and exchanges over the next three years, it said in an e-mailed statement today.

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The exchange is counting on growing demand from overseas money managers to revive trading volumes after the turnover of Kospi index shares dropped to the lowest levels since 2007 amid a fifth year of outflows from South Korea’s individual investors. Foreigners bought a net $12.9 billion of South Korean shares in the second half of 2013 as the Kospi climbed 7.9 percent. The gauge has dropped 2.6 percent so far this year.

“The new plan is in place to lure more foreign investors into the local market and boost the overall trading volume,” Choi said at a press conference in Seoul today.

The 100-day average value of shares changing hands on the benchmark Kospi index fell to the lowest level since June 2007 at the end of December, according to data compiled by Bloomberg. Individual investors, which account for about half of equity trading, sold a net $5.3 billion of shares last year.

The bourse plans to extend after-hours trading as early as the first half of 2014 and may lengthen regular trading hours after holding discussions with industry officials, Choi said.

Korea Exchange is also planning to introduce futures contracts on the Kospi 200 Volatility Index, a gauge of expected price swings in the nation’s stock market.